Mayberry v. Home Ins. Co., 277

• Decision Date: 18 June 1965
• Docket Number: No. 277,277
• Citation: 142 S.E.2d 626,264 N.C. 658
• Parties: Floyd L. MAYBERRY, Trustee of John Franklin Mayberry, Incompetent, v. HOME INSURANCE COMPANY, a Corporation.
• Court: North Carolina Supreme Court

Page 626

142 S.E.2d 626

264 N.C. 658

Floyd L. MAYBERRY, Trustee of John Franklin Mayberry, Incompetent, v. HOME INSURANCE COMPANY, a Corporation.

No. 277.

Supreme Court of North Carolina.

June 18, 1965.

Bradley, Gebhardt, DeLaney & Millette by Paul B. Guthery, Jr., Charotte, for plaintiff appellant.

Helms, Mulliss, McMillan & Johnston by James B. McMillan, Charlotte, for defendant appellee.

PARKER, Justice.

Plaintiff has a number of assignments of error to the admission of evidence over his objections and exceptions, and to the judge's findings of fact. All these assignments of error are overruled.

When the parties waived a jury trial, Judge Riddle occupied a dual position: he was the judge required to lay down correctly the guiding principles of law, and he was also the tribunal compelled to find the facts. In such a trial the rules of evidence as to the admission and exclusion of evidence are not so strictly enforced as in a jury trial. If there was incompetent evidence admitted, it will be presumed it was disregarded by the judge in making his decision, unless it affirmatively appears that the action of the judge was influenced thereby. Bizzell v. Bizzell, 247 N.C. 590, 101 S.E.2d 668.

Defendant alone introduced evidence, except there was admitted in evidence a stipulation as to certain facts agreed upon by the parties in open court. Most of the evidence admitted was competent, and even if irrelevant evidence was admitted, its admission was not prejudicial to plaintiff. The judge's findings of the crucial facts are amply supported by competent evidence and by the stipulation entered into by the parties, and are as conclusive on appeal as the verdict of a jury. Strong's N.C. Index, Vol. 1, Appeal and Error, § 49.

Plaintiff further assigns as error the judge's conclusion of law and the signing of the judgment. This assignment of error raises the question as to whether an error of law appears on the face of the record proper. This includes the question whether the facts found by the judge are sufficient to support his conclusion of law and judgment, and whether the judgment is regular in form. Strong's N..C. Index, Vol. 1, Appeal and Error, § 21.

The question for decision in this case is whether Home Insurance Company, the liability insurer, is required to pay interest on the entire judgment of $79,500 rendered in plaintiff's favor against Grier, its insured, from 12 December 1962, the date on which the judgment was entered, until 5 April 1963, the date on which defendant paid $5,000 to the clerk of the superior court of Mecklenburg County to be applied to the judgment obtained by plaintiff against Grier, which was the limit of liability coverage under its policy issued to Grier for bodily injuries to any one person in one accident, as contended by plaintiff, or only interest on that part of the judgment which represents the policy limit of $5,000, as contended by defendant. On this question there is considerable conflict in the cases elsewhere. Powell v. T. A. & C. Taxi, Inc., 104 N.H. 428, 188 A.2d 654 (1963); River Val. Cart. Co. v. Hawkeye-S. Ins. Co., 17 Ill.2d 242, 161 N.E.2d 101, 76 A.L.R.2d 978 (1959). For a list of cases that hold that insurer's liability extends to interest on the entire amount of judgment, see Annot. 76 ALR2d 987, § 4. For a list of cases that hold that insurer's liability is limited to interest on the amount of the policy limit, see Annot. 76 ALR2d 991, § 5. This question has not been resolved in this jurisdiction. The determination of this question necessarily requires an analysis and examination of the provisions in the insurance policy here, as well as a choice of the preferable rule to be followed in this State. Powell v. T. A. & C. Taxi, Inc., supra.

Plaintiff and defendant stipulated and agreed on open court, inter alia, as follows: 'On April 5, 1963, the defendant Home Insurance Company on behalf of Preston Douglas Grier, Jr., paid the sum of $5,000 to the clerk of the superior court of Mecklenburg County, N. C. to apply on the judgment. This was the stated limit of the liability coverage of Home Insurance Company providing injury to any one person in any one accident.' This was also found as a fact by the judge. However, in the Insuring Agreement in the insurance policy here entitled 'II. Dfense, Settlement, Supplementary Payments,' there is a clear ray of light indicating additional benefits. Section (b)(2) thereof reads as follows: 'pay all expenses incurred by the company, all costs taxed against the insured in any such suit and all interest accruing after entry of judgment until the company has paid or tendered or deposited in court such part of such judgment as does not exceed the limit of the company's liability thereon.' (Emphasis supplied.)

Several observations may be made concerning section (b)(2) quoted above. First, the phrase 'all interest accruing after entry of judgment' does not connote the thought of some interest, or part of the interest on the judgment, but rather compels the conclusion of all interest whatever its amount in relation to the policy limits. Further, the phrase referring to interest uses the word 'judgment' without qualification, while in the same clause the phrase limiting the liability for interest refers to 'such part of such judgment as does not exceed the limit of the company's liability thereon.' Obviously, the insurer knew how to qualify the term 'judgment' to achieve the result that it urges here. It did not do so. Powell v. T. A. & C. Taxi, Inc., supra; River Val. Cart. Co. v. Hawkeye-S. Ins. Co., supra; United Services Automobile Association v. Russom, 241 F.2d 296 (5th Cir. 1957), in all of which cases the insurance policy involved contained a provision identical with section (b)(2) in the instant case quoted above. Second, it has been well-established law for many years that the insurer may be obligated to pay costs or interest on a judgment recovered against its insured, although these terms may bring the total payment beyond the limits set in its policy. Powell v. T. A. & C. Taxi, Inc., supra; Brown v. Great American Indemnity Co., 298 Mass. 101, 9 N.E.2d 547, 111 A.L.R. 1065; Maryland Casualty Co. v. Wilkerson, 210 F.2d 245 (4th Cir. 1954). Third, the language used in this section of the policy is consistent with the view that interest on the entire judgment until 5 April 1963 should be allowed. Finally, section (a) quoted above reads in part: '* * * but the company may make such investigation, negotiation and settlement of any claim or suit as it deems expedient.' In respect to this clause, the Supreme Court of Illinois said in a unanimous opinion in River Val. Cart. Co. v. Hawkeye-S. Ins. Co., supra:

'In addition, the realities of the relationship between the insurer and the insured argue against the insurer's interpretation [that its liability is limited to interest on the amount of the policy limit]. Under the terms of the policy the insurer has complete control of any litigation from which it might incur liability. The insured cannot settle with the plaintiff without releasing the insurer from its obligation. Any delay that may cause the accumulation of interest is thus the responsibility of the insurer. And until it has discharged its obligations under the policy it should bear the entire expense of this delay.

'Insurers themselves have recognized this. The National Bureau of Casualty Underwriters formerly included the clause now before us in its form of standard policy. It has now changed its from to read 'all interest on the entire amount of any judgment therein which accrues after entry of the judgment.' In announcing the change, it said: 'Several court cases have held that an insurer's obligation to pay interest extends only to that part of the judgment for which the insurer is liable. The respective rating committees have agreed that this is contrary to the intent. As a result, the wording with respect to payment of interest in the new Family Automobile Policy has been restated, in order that it be entirely clear that all interest on the entire amount of any judgment, which accrues after entry of the judgment, is payable by the insurer until the insurer has paid or tendered or deposited in court that part of the judgment which does not exceed the limit of the insurer's liability thereon.' Ramsey, 'Interest on Judgments under Liability Insurance Policies,' Insurance Law Journal No. 414 (July, 1957), p. 407, at p. 411.'

In accord Powell v. T. A. & C. Taxi, Inc., supra.

In considering the supplementary payments which the liability insurer agreed to pay in Part II of its insuring agreements, there is additional language which supports the validity of the reasons stated above. In addition to agreeing to pay the expenses of its insured, costs and interest, it has...